Consumers staying away from high-end PCs

More bad news for the PC industry: Consumers think low-end and mid-range models will do just fine.

More bad news for the beleaguered PC industry: According to IHS iSuppli, consumers will continue to favor lower-end desktop PCs and notebook computers over high-performance models for the rest of this year and beyond.

Top-end systems, priced at $1,000 and up, will account for only 6 percent of the PC market in 2012, according to an IHS report. So-called "performance" systems are expected to account for 6 percent of desktop PCs sold this year and 9 percent of notebooks, according to the firm.

In desktops, IHS expects both "mainstream" and "value" PCs to each take about 47 percent of the market. In notebooks, the firm expects low-end systems—priced at below $500—to take about 47 percent of the market, with midrange notebooks—priced at between $500 and $1,000—expected to account for about 44 percent of the market.

To recap, last month IHS forecast that PC sales would decline this year for the first time since 2001. Intel Corp. and OEMs are hoping to revive the market with compelling new ultra-thin, ultra-light notebooks that have thus far not caught on in a big way, largely due to their comparably high prices.

IHS's latest report can't bode well for the Intel camp. The chip giant is banking on consumers being willing to pay higher prices for systems that bring many of the features that have been a hit in tablets to a form factor that more closely resembles a traditional PC. But the IHS data suggests that consumers are very willing to accept what's available in a low-end or mid-range as long as it costs them less.

"For the desktop as well as the notebook PC market, the continuing domination of lower-end computers is due to the rising performance overall of PCs and their greater affordability to the purchasing public," said Peter Lin, senior analyst for compute platforms at IHS, in a statement.

According to Lin, PCs now categorized in the mainstream or value segments—while not as powerful or feature rich as the high-end systems—are powerful enough in their own right. "These more affordable systems feature current-generation technologies that prove adequate for most uses, or boast increased microprocessor power that raises the performance bar even for seemingly rudimentary machines," Lin said.

As processors become more powerful, IHS expects more computers to ship with increased computing capability. Quad-core processors, for example, will be found in 179 million notebook PCs by 2016—about 59 percent of all notebooks expected to be in the market by then, according to IHS.

Much has been said and written about the dawn of the post PC era. Consumers are proving willing to forgo new PC purchases in favor of tablets, smartphones and other mobile devices that are more convenient to use and offer some but not all of the capabilities of PCs. For those customers who are buying new PCs, the top of the line is not worth the extra money. With mid- and low-end PCs sporting more powerful processors, the overwhelming majority of people simply don't feel like digging deeper in their wallets for bleeding edge technology.

And gamers are not a mass market? I believe most of the people that buy computing platforms (PC, tablets, consoles, etc.) do so mostly for entertainment reasons as for work the boss supplies the equipment anyway! In that case PC is waning down probably due to lack of a killer application. I just give it to a cool killer app surfacing that requires all the computing power of an high-end PC, and that pleases the masses, and the PC will be back in game. For instance I am a huge fan of space simulation games, and would buy a new high-end PC just to play the new Star Citizen/Squadron 42 game currently in the crowdfunding stage (3.5M USD already raised, 50K plus of eager fans that will probably need their desktops upgraded).

We never know exactly what the future will bring but we can extrapolate some trends to get some rough idea.
There was a time when any respectable computer had its own room. Now we try to make them unobtrusive in our work, play or entertainment environments. On their way to becoming ubiquitous they've lost most of their social standing.
I have no doubt that 'computers' will become much more powerful but not at our expense of their regaining intrusiveness. The trend is for them to disappear. 'Computers' will not be a significant topic of conversation in 10 years.
x86 will not be the primary bearer of the computational power too much longer. It is running out of steam. With asymmetrical computation we will find specialized processors doing a greater proportion of the necessary processing.
DWide1, above points to 'voice driven' and 'Perceptual Computing'. These contain tasks that are best served with specialized cores. Adapteva has developed a 64 core array capable of 100 Gflops at only 5 Watts power consumption. With that sort of affordable performance we will see quite a sea change in what, how and where computation is brought to bear.

Thanks, Horta, you make me blush. I'm no better than the next guy to see into the future accurately, but it does seem that computing devices will become more or less commodity items, assuming they haven't already done so. The trend was clear when IBM PS/2s had to give way to the cheaper and fast-improving IBM clones. The coolness of the MCA bus of the PS/2 was soon history, at first unable to do double duty as a memory bus anymore, and soon after outclassed for peripherals too. That trend won't stop, IMO.
Initially, digital machines were mainframes. Then the machines became more pervasive with minis and later even more so with the single chip processor (e.g. PCs and embedded smarts in common appliances). I think personal digital electronic gadgets are just a continuation of this pervasiveness trend.
What's next, I'll bet, is more of this. What the press likes to call IoT is simply more of what we have been seeing. Potentially even embedding processors in people (uuh, I mean in addition to the brain).
As to applications, especially if extreme weather events keep getting the limelight, I'll bet there will be a lot of eco-oriented control software being developed, and eco-oriented computing embedded in all manner of systems (the grid, home appliances, transportation, traffic control, you name it). More processing, more smart control, in everything we use. Self-driving cars, for instance, I think are a manifestation of this increasing pervasiveness of computing.

Bert, I'm impressed at your ability to see through the fog, look beyond the 'now', and state reality as it is. Your views seem neither biased nor radical compared to most others I've seen post on EETimes.
From historical trends, you're applying concepts to still emerging markets (mobile) and concluding well before anyone's even thought about this, that the mobile market will see its bright light fade sooner than anyone expects.
The only thing missing here is, what's next? People will have cheap, powerful, efficient, quality computing power. Will the computing industry turn into something like the memory industry? Those that aren't bringing down the costs will be pushed out rapidly because the margins will be so little?
Any ideas on what you see coming, or even what you would like to see coming?

I can't imagine that desktops are going away (even if there are now lots of other options for non-power home users), and Microsoft Windows and office products look like they are going to continue to dominate the desktop.
Considering Windows 8 provides a fuller experience with a touch screen (even on a desktop) I agree with the idea of the re-invention of the PC and I think it applies to the desktop as well.

I have to disagree with those who assume that any status quo of today will remain the status quo for all time!
Yes, we are in a strange phase now, where lots of casual users are buying up smartphones and tablets, and therefore the manufacturers of computing devices and software are dedicating a lot of time and effort to meet these demands. But it's also true that these handheld devices are approaching mid-level PCs in their computing power.
Therefore, the only logical conclusion is that the current status quo will soon end, and the apps will be demanding more power from the handhelds, and consequently also putting upward pressure on PC hardware.
After all, growth curves are always S curves. Handheld devices will also eventually saturate the market, and the device makers and software developers are going to want to have something new to sell. Innovation will not end.

Intel's other problem is that when making a choice between a higher processor clock speed (or more cores) and more memory, more memory is almost always the right choice. A SSD might be above a faster CPU, but they are still too expensive for the $500 PC. Most CPUs have enough performance for the consumer workload, but browsers use lots of memory, and consumers only close a window when they reboot the machine.

[disclaimer: I work for Intel, but my opinions are my own and do not reflect the company's guidance]
You *have* reported Intel's latest thrust in apps, Rick. Partnering with Nuance to make voice-driven PCs, and the whole Perceptual Computing initiative, for which a SDK was just released. Convertibles and dockable tablets with touch are just the beginning of the re-invention of the PC. Don't count us out quite yet. :D